Itochu terminates Gt Southern agreement

Japan's Itochu Corporation is expected to push for lower woodchip prices after terminating its purchase agreement with failed agribusiness group Great Southern.

Itochu was able to terminate the agreement because Great Southern has been placed in receivership.

It intends to negotiate a new short-term contract, which is likely to reduce returns to investors in Great Southern timber projects.

The announcement is below:

Great Southern Managers Australia Limited (ACN 083 825 405)
(Administrators Appointed) (Receivers and Managers Appointed) ("GSMAL")

Termination of Hardwood Sale and Purchase Agreement with Itochu Australia Ltd=

Itochu Australia Ltd (major trading company) has exercised its right to terminate the Hardwood Sale and Purchase Agreement ("HSPA") with GSMAL, relying on a clause in the HSPA that entitles Itochu Australia Ltd to terminate the HSPA in the event of appointment of receivers.

The HSPA encompassed the sale of hardwood woodchips, exported from the Port of Albany in Western Australia on a Free on Board (FOB) basis for investors in the Great Southern Plantations 1996 to 2001 schemes.

Itochu Australia Ltd has indicated its intention to enter into discussions with the Receivers of GSMAL, or potential new Responsible Entities of the Great Southern pulpwood schemes with regards to entry into a new short-term contract.